Economy

Markets cautious ahead of Fed statement

Markets cautious ahead of Fed statement

ENERGY: Benchmark US crude oil was unchanged at USD59.09 a barrel.

Traders are reacting somewhat to renewed concerns over U.S-China trade relations.

With global economic growth appearing to slow, traders were focused on the Fed, which kicks off a two-day policy meeting later in the day, for clues about the likely path of USA borrowing costs.

Most currencies remain within well-trodden trading ranges before the Fed decision, as market participants were cautious after taking cues from USA data offering new signs the world's top economy is on a path of slower growth.

The Japanese yen weakened 0.04 percent versus the greenback at 111.44 per dollar.

The U.S. central bank since early this year has signaled a "patient" approach to increasing borrowing costs, drawing an end to a gradual, three-year cycle of monetary tightening marked by nine rate hikes, including seven during the 2017-2018 period.

European shares were expected to open slightly lower, with financial spread-betters seeing Britain's FTSE, France's CAC and Germany's DAX ticking down between 0.03 and 0.12 per cent each.

The MSCI gauge of global stocks shed 0.35 percent, and was poised to close lower for the first session in eight.

The Australian dollar has gained the most from the USA dollar's retreat though it was hit by Reserve Bank of Australia minutes that expressed concern about the housing market. Asian shares were mixed in muted trading Tuesday as investors awaited the U.S. Federal Reserve meeting later in the week.

The Dow Jones Industrial Average fell 26.72 points, or 0.1 percent, to 25,887.38, the S&P 500 lost 0.37 points, or 0.01 percent, to 2,832.57 and the Nasdaq Composite added 9.47 points, or 0.12 percent, to 7,723.95.

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In currency markets, sterling touched $1.3311 after slipping as low as $1.3241 as traders expected European Union officials to give Britain a delay on Brexit negotiations, though the uncertainty kept the market volatile.

U.S. Trade Representative, Robert Lighthizer, and Treasury Secretary, Steven Mnuchin, are expected to travel to China next week for another round of trade talks with Chinese counterparts.

British leader May's Brexit plans were thrown into turmoil yesterday when the speaker of parliament ruled that she could not put her divorce deal to a new vote unless it was re-submitted in a fundamentally different form.

Against a basket of key rival currencies, the dollar was nearly 0.1 per cent higher at 96.454 as it managed to find its footing after hitting its lowest level since March 1 at 96.291 in overnight trading.

Precious metal palladium, used in things like vehicle catalytic convertors, topped the $1,600 an ounce mark for the first time as news that Russian Federation is planning to ban exports of precious metals scrap fuelled concerns over an already supply-constrained market.

In the currency market, the pound found steadier footing on Tuesday after falling to as low as $1.3183 all-night as legislators cast doubt on Prime Minister Theresa May's third endeavor to get parliament to back her Brexit deal. Prices have almost doubled since their mid-August lows and have surged more than 25 percent this year.

The Australian dollar slipped a quarter of a per cent to 0.7070 dollar on a decline in 10-year bond yields and after Bloomberg reported that some US officials expressed concern that China is pushing back against USA demands in trade talks.

Benchmark 10-year notes last rose 7/32 in price to yield 2.5889 percent, from 2.612 percent late on Tuesday.

Spot gold dropped 0.2 percent to $1,303.99 an ounce. India's Sensex advanced 0.2 percent to 38,422.94.